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Maximum dispute on minimum wage

Everyone who pays attention to the dysfunction in Washington, D.C., knows the hyperpartisan atmosphere makes it next to impossible to get anything accomplished. But more and more frequently, it seems, political leaders can’t even agree on what their own experts are telling them.

Take the case of the minimum wage, and proposals by President Barack Obama and Democrats to raise it.

This week, the nonpartisan Congressional Budget Office released a report saying that raising the federal minimum wage to $10.10 per hour, as the president wants, would indeed increase wages for some 16.5 million Americans and it would raise millions of people out of poverty.

But, much to the chagrin of Obama and congressional Democrats, the CBO also said raising the minimum wage from $7.25 to $10.10 per hour would result in the neighborhood of 500,000 fewer jobs in 2016, and possibly as many as 1 million.

Naturally, Republicans jumped on the report as a reason to oppose the wage hike, which they were already planning to do.

“With unemployment Americans’ top concern, our focus should be creating — not destroying — jobs for those who need them most,” said House Speaker John Boehner.

For the White House, the unsurprising response was to take potshots at the messenger.

One Obama administration economist suggested that the CBO did not fully appreciate “how the literature has moved in terms of understanding the cost savings you get from reduced turnover when you raise the wages for lower-wage workers.”

One liberal group accused the CBO of being “in outer space.”

But Douglas Elmendorf, the director of the CBO, and no stranger to political criticism from both parties, carefully countered the Democrats’ criticism Wednesday.

“I want to make clear that our analysis is completely consistent with the latest thinking in the economic profession,” he said during a meeting. “We did an exhaustive review.”

Elmendorf, who was selected for his current post in 2009, when Democrats controlled both houses of Congress, has served under both Democratic and Republican leadership and has kept his political views to himself. Early in his career as director of the CBO, Republicans were furious at the agency because they believed the CBO painted too rosy a picture of the economic effects of Obamacare.

So, there’s little chance the CBO is trying to tilt its minimum-wage analysis to favor Republicans.

Even with this report, there are still sound arguments to be made for raising the minimum wage. Lifting millions of people out of poverty is nothing to sneeze at. But those reasons must be weighed against the likelihood of some low-wage job losses, as outlined by the CBO.

Democrats should be making the case that when those effects are weighed, the scales tip toward the benefits of raising the minimum wage. They shouldn’t be taking aim at a trusted, nonpartisan agency for releasing data they dislike.

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By M. Todd Miskel - Saturday, February 22, 2014

Inflation will increase across the board for everyone with a increase in minimum wage. Business will pass the higher labor costs on to the consumer with price hikes.

Business will also see a higher minimum wage as more disposable income per household and use that as a reason to increase their prices for goods and services.